Bitcoin Gives up More Than $500 Before Recovering Most Its Losses

The price of Bitcoin dropped more than $500 before recovering most of its losses on Tuesday. The digital currency initially retreated below the psychologically important level of $8,000 only two days after breaking it for the first time. The drop was due to reports of a theft that affected an alternative cryptocurrency.

The firm behind a cryptocurrency called Tether said that $31 million was taken from the Tether Treasury wallet on November 19 in the wake of a hack. The stolen amount was sent to an unauthorized Bitcoin address, according to the announcement the company has published on its website yesterday.

The company’s development team is now attempting to prevent the stolen amount, which was in Tether tokens, from entering the wider trading economy. The team said that the tokens will not be redeemable on the Tether platform.

The hack temporarily raised concerns about the safety and security of digital currencies, which erased a chunk of Bitcoin’s rapid gains this week. However, Bitcoin quickly recovered most of its losses as investors remained optimistic following recent institutional interest in the virtual currency. Bitcoin overcame a long list of hacks in the past with relative ease, despite the dent these hacks left in investors’ confidence in the security of cryptocurrencies.

Bitcoin has been through rapid ups and crushing downs in November. The virtual currency quickly moved to more than $7,800 on November 8, ahead of a highly anticipated upgrade to the underlying Bitcoin technology. Bitcoin then lost as much as 29% of its value to reach about $5,580 on November 12, when the awaited upgrade was called off.

After recovering some of its losses during the past week, Bitcoin shot through $8,000 on Sunday as institutional investors appeared to be pushing harder into the world of digital currencies. The fast growth of the total cryptocurrencies market capitalization this year has made it harder for investors from Wall Street to ignore these new digital assets.

One of the latest institutional pushes into the cryptocurrency world came from CME Group Inc., which announced plans to start offering futures trading on Bitcoin starting next month. Square, Inc., a financial service based in San Francisco, also has plans to incorporate Bitcoin by beginning to test Bitcoin payments on its Cash app. Coinbase decided to ride the wave as well by offering custodian service for hedge funds and sovereign wealth funds.

Bitcoin began 2017 at a value of about $1,000 per Bitcoin. The digital currency then reached $3,500 in August, at which point analysts expected the digital currency to touch $5,000 by 2018. However, the growing institutional interest grabbed enough attention from investors to overshadow warnings of a value bubble and push the digital currency past most expectations.

BTC/USD traded at 8,198.1 on the Bitstamp exchange as of 11:40 GMT on Tuesday after dropping to 7,780 at 03:35 GMT. BTC/USD began trading today at 8,231.5.

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